From the attempts to forgive student loans to the debt-ceiling crisis, the US media has been filled with stories relating to debt in 2023. But with the government, private businesses and individuals all struggling under ever-growing debt, many debt collectors are unsure how the coming months and years will unfold. 

In this article, we explore how the current state of debt in the US is likely to impact debt collection in 2024 – and what you can do to stay ahead of the pack. 

What is the Current State of Debt in the US?  

2023 has seen a dramatic uptick in debt across the board: 

  • The average household debt has risen nearly $10,000 since 2018, reaching over a collective total of over $17 trillion in Q2 2023 
  • Corporate debt default increased 53% year-on-year. 
  • And US national debt reached $33 billion for the first time ever. 

As a result, nerves are very high: some predict the national debt will exceed 100% of GDP within the next two years, which will require drastic measures to avoid a default. And while a range of policy decisions will be taken to curb and manage growing debt, financial organizations that wish to remain profitable have several hurdles in front of them. 


3 Future Trends Every Debt Collector Should Know About 

1. Increased delinquency and default rates

American credit card debt reached a record high of over $1 trillion this year, and this will inevitably lead to increased delinquency rates. Analysts currently predict that losses related to credit card delinquency will peak around the end of 2024 or early 2025.  

One report suggests delinquency rates could reach 10% next year, and Goldman Sachs suggests that losses will reach 4.95% before they start to reduce. Similar trends are predicted in auto debt and commercial real estate (CRE), with CRE delinquency rates already nearly doubling to between Q4 2022 and Q1 2023.  

Ultimately Moody’s projects that corporate default rates will rise to 4.9% in 2024, while Deloitte argues banks need to prepare for increased consumer loan default rates next year. 

What does this mean for debt collectors? 

Increased debt delinquency and default rates put debt collectors at risk of incurring severe losses. As consumers struggle to repay their debts, collectors will have to find new ways to pinpoint and address the right accounts. 

However, with more accounts in debt, it becomes harder to locate those accounts that can actually afford to repay their debts. It also becomes more important that creditors are careful and don’t pursue legal action that causes individuals significant pain without producing a return for the debt owner.  

2. Growing value of the debt collection market

The debt market is expected to be worth $16.7 billion by 2025, with the market for debt collection services forecast to reach over $4 billion by 2028. This will be partly driven by increased consumer and corporate debt, but there is also a booming software market driving greater efficiency – which is expected to be worth nearly $5 billion next year. 

This translates into two broad categories: consumer-facing technology, such as digital-first payment methods; and collector-focused technologies which help to automate key tasks like asset searching, improve account analysis and ultimately produce a more efficient collection process. 

What does this mean for debt collectors? 

A growing market is a major opportunity for debt collectors, but it also presents some difficult decisions. They will need to choose the right technologies to pursue and figure out how to effectively integrate those technologies into their collection process.

3. AI-driven debt collection

The topic of Artificial Intelligence (AI) has been hard to escape in 2023, and it will only grow in importance over the coming years. However, AI has thus far been relatively underutilized by financial firms – especially in relation to debt collection.  

This has largely been driven by concerns around compliance, as collection teams fear losing control over their decisions. However, as these teams realize that AI, when used correctly, is a tool to augment decision-making – not replace it – we will see a dramatic uptick in adoption.  

What does this mean for debt collectors? 

The results AI produces will be striking. At RDS, we’ve already shown that AI models can increase profits by 29%. And we expect to see huge growth in demand for such models as organizations struggle to navigate a large increase in delinquent accounts in 2024 and beyond. 

Ultimately, this will lead to a race for AI adoption, as financial organizations rush to implement the most cutting-edge solutions faster than rival firms. 

Beat Your Competitors to the AI Punch with RDS 

For over 37 years, RDS has been at the forefront of debt collection technology. Today, our proprietary analytics models represent the most comprehensive AI-driven tools on the market. 

Want to drive more profit in 2024? 

Book a demo.